Opinions on Concessions

Opinions on Concessions

May 2001

AIRPORT BUSINESS spoke with Robert Weinberg of MarketPlace Development, Bill Anton of Anton Airfood, and Scott Sampson of Westfield Corporation about concessions development. Each had
interesting things to say about what’s happening and what they would do as airport managers.

On current trends...
Weinberg:
"At the end of the ’80s, master concessionaire bidding became too political. It was a sign to me that if they had to get political to get a bid, they didn’t have the merits to be a good operator and had to rely on the politics.... Then something started happening around the country. In Portland, they rebuilt the retail.... The interesting thing they did was to bring in the local operators.... The pressure to provide more satisfaction caused master concessionaires to become more creative."
Anton: "[Developers] have sold some airports on [their] concepts, and a couple of them put together some respectable programs. They’re not continuing in many cases [because] they take too much money out of the pie. The airports don’t get as much revenue as they should and they squeeze the concessions operators so that they’re not making what they should be making, so there are failures....
"There are a lot of very good operators who have tried to get into the airport world... they get slaughtered."
Sampson: "There’s clearly a trend among airports and airlines to seriously consider the growing developer model. It’s typically the option that gives you the strongest tenant mix, in terms of the blending of the proven national names and a local sense of place type concepts."
As an airport manager...
Weinberg:
"If you give all the food to one guy, if he spruces up one restaurant, he hurts his others. If I were still in airports, I wouldn’t give all the food and retail to one guy. Not doing so creates more risks and is more difficult, but the revenue returns are higher and customer satisfaction is much better.
"It’s difficult to switch away from a master concessionaire. Smaller airports, or those just beginning to improve their concessions, will most likely go with a master, and there’s nothing wrong with that. By the time you take everything into consideration, the extra staff, time, etc., it’s probably a wash revenue-wise."
Anton: "Airports don’t need to give away their revenue to a developer. Through consultants and/or top-notch operators, they can get the same results in terms of total gross revenues, while making out probably twice as good financially for the airports themselves."
Recommendations...
Weinberg:
"Acknowledging a need is a huge part of the battle. After that I would say to go look at a lot of other airports to see what they’re doing.... Every city and every airport has different needs and masters are certainly appropriate in some cases. Talk to a lot of people; find out what works and what doesn’t work and adapt that information to fit needs...."
Anton: "People keep trying different things. I think at the bigger airports, the idea of breaking it up into different packages is probably not a bad idea. But the size of those packages, I don’t think they can be less than $7 million to make it financially viable for somebody to do."
Sampson: "Take a close look at the enplanement levels in [the] airport; the concessions opportunities in terms of the square footage available. And then visit or tour airports that are similar size."
On the future...
Weinberg:
"There’s a lot of rummaging around as airports are moving away from masters.... Industry groups are restructuring.... There’s some logical organization as far as who does what, but what we should be seeing soon is more clear-cut lines and more definite responsibilities."

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